Patents and the Private-Versus-Public-Rights Distinction

Are patent rights public or private rights? Generally speaking, patents are privately held, and their enforcement is limited to civil suits brought by their private holders. Hence, in some sense, the answer might seem obvious. But for purposes of addressing issues of separation of powers and the right to a jury trial, the answer is not so straightforward. For these purposes, the United States Supreme Court has made central a public-versus-private-rights distinction under which the key question is whether the rights at issue are “integrally related to particular government action” because “the claim at issue derives from a federal regulatory scheme, or … the resolution of the claim by an expert government agency is deemed essential to a limited regulatory objective within the agency’s authority.” Stern v. Marshall, 564 U.S. 462, 491–92 (2011). If the answer to this question is “yes,” the right in question is a “public right” whose application Congress may entrust to adjudication by an administrative body. If, on the other hand, the claim is one of “private right,” a category typically understood to include suits traditionally brought at common law, the Court’s understanding of constitutional requirements of separation of powers means that authoritative trial-level adjudication may occur only in an Article III court, one in which the presiding judge or judges enjoy the protections of life tenure and salary protection mandated for the judicial branch by Article III of the United States Constitution.

Controversy rages over the extent to which patent rights—or, at least, challenges to patent rights’ validity—fall within the “public rights” exception to Article III adjudication. The motive force for this controversy is the popularity of new procedures for post-issuance review of patent claims by administrative patent judges of the U.S. Patent and Trademark Office (PTO). Starting in the early 1980s, Congress authorized the PTO to conduct post-issuance proceedings that could reconsider the validity of issued patent claims on either the PTO’s own initiative or that of a third party. Through the America Invents Act of 2011, Congress revised and elaborated on PTO post-issuance proceedings. One form of the revised set of proceedings, so-called “inter partes review,” has flourished since 2011: the PTO currently receives over 1,000 petitions for inter partes review each year. In such a proceeding, the patent holder and a patent challenger contest the validity of issued patent claims before administrative patent judges of the PTO’s Patent Trial and Appeal Board (PTAB).

Post-issuance proceedings at the PTO have long attracted arguments that they unconstitutionally tread on Article III courts’ mandate to exercise the “judicial Power of the United States.” U.S. Const., art. III, § 1. The Federal Circuit has consistently rejected such arguments, and the Supreme Court has so far declined to review them on the merits. Interestingly, however, two Federal Circuit judges recently indicated that they believe that the Federal Circuit should hear these arguments en banc. In a different case, the Supreme Court requested the PTO’s response to a petition challenging the constitutionality of inter partes review. Federal Circuit Judges O’Malley and Reyna separately dissented from their court’s denial of an en banc hearing. Judge O’Malley expressed concern that “it is far from certain” that an earlier panel decision’s “premise—that patent rights are public rights—is correct.” Cascades Projection LLC v. Epson America, Inc., Nos. 2017-1517, -1518, slip op. at 2 (Fed. Cir., May 11, 2017) (O’Malley, J., dissenting). Judge Reyna asserted that “[t]he Supreme Court has long held the view that patents are private rights worthy of protection.” Id. at 5 (Reyna, J., dissenting). But Judge Reyna also observed that, for separation-of-powers purposes, “the line between public and private rights … remains hazy, in particular in connection with patent rights.” Id. at 23. Judge Reyna viewed this haziness as crying for clarification. Id. In contrast, in briefing to the Supreme Court on behalf of the PTO, the Solicitor General’s Office has argued that there is no relevant haziness. According to the government’s brief, “[p]atents are quintessential public rights,” creatures of statutory law whose review for validity Congress has properly entrusted to the PTO, an expert administrative agency. Brief for the Federal Respondent in Opposition, Oil States Energy Servs., LLC v. Greene’s Energy Group, LLC, No. 16-712 (S. Ct. 2017), at 9.

Regardless of how this controversy is resolved, these opinions and briefing highlight how some form of distinction between public and private rights has become vital to allocations of power in the modern administrative state. The Court’s most recent articulations of how to make this distinction seem to focus more on defining the “public” side of the divide than the “private” one. Should the Court give more time to what makes a right or claim comparatively “private”? Can more general debates and scholarship on the scope of private and public law provide guidance on this point? Or is this particular public-versus-private divide essentially just an idiosyncratic creature of administrative law that rightly has little connection to general scholarship on the nature of private law? The closest that the government’s brief came to citing any such general literature was its citation of Black’s Law Dictionary. Readers are welcome to suggest alternatives.

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[…] Are patent rights public or private rights? Generally speaking, patents are privately held, and their enforcement is limited to civil suits brought by their private holders. Hence, in some sense, the answer might seem obvious. But for purposes of addressing issues of separation of powers and the right to a jury trial, the answer is not so straightforward. For these purposes, the United States Supreme Court has made central a public-versus-private-rights distinction under which the key question is whether the rights at issue are ‘integrally related to particular government action’ because ‘the claim at issue derives from a federal regulatory scheme, or … the resolution of the claim by an expert government agency is deemed essential to a limited regulatory objective within the agency’s authority’ … (more) […]